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tv   Fast Money  CNBC  September 25, 2009 8:00pm-8:30pm EDT

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i would guess that a guy like him wouldn't just do that, that it would be a concerted effort to send a message -- let's send the right message, let's do it together, let's do it so that we are not misinterpreted. they didn't give -- he didn't give any sense of timing in that editorial at all. so i think they were just reiterating the message that look, we're not going to fall asleep at the switch here. we know we need to do this at some point. we're going to be vigilant. that was it. that was the entire message that i got. >> and that's the same message that we've heard again -- >> again and again. they've been consistent. that's right. i actually thought, guy -- i disagreed a little. i thought the market action was pretty good today considering you that had durable goods numbers that weren't so good. you had rimm that was terrible. you had some housing data that was weak. put all of that together, down three, four -- not a big deal. >> i thought the market would be down a lot more than it was, frankly. i was encouraged by the performance. but i still think overall we're headed down. >> i think you have two stories this weekend. the fundamental story and then you have the technical story from wednesday.
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the technical story has been all year that anytime we take out resistance in the market it becomes support. if the bearish technicals are correct and we go down and test 10, 10 to 1015 that's the level you have to hold. on the fundamental side, basically the market is challenge the premise that if the federal reserve takes the training wheels off and allows the little boy to go ride the bike by himself then he'll be able to ride the bike by himself, that risky assets will continue to move higher. and you know what, when you take the training wheels off the bike at first no, doubt about it, everyone's going to do it, the bike's going to wobble a little bit. but eventually it steadies out. >> but the key is we always think the market is the best leading indicator. has this market run up based on recovery or is it run up based on the funeral is off? no one can tell me what the difference is. >> several different stages of that. back in march and april armageddon taken off the table, that's the funeral is called off. >> but the market is ahead. >> but now you're looking forward at this point, june, july, august, and september, it has been about a modest recovery. >> the problem is when do we get
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back to normalized earnings? i think that's what people are watching, especially in the financials. >> in the next couple weeks particularly when the financials do report. speaking of financials we've all been saying on the desk that goldman sachs is the canary in the coalmine. all eyes were on gs today, made a huge intraday reversal finishing lower by almost 4%, closing below that $180 mark. certainly this -- it really seemed to be the turn in the market least in today's session. >> it came after citibank made some positive comments after meeting with management. i think citi has a $225 price target. goldman reversal today is a little bit startling. they're still first in m&a fees in the standings, still the best out there. but again, the stock's had a tremendous run. you wonder if today's reversal, you come back again in a couple weeks and say that was the day. i happen to think it is, frankly. i do think you can see the stock trade in the 16 0z. citi's comments notwithstanding. maybe it does go to 225 but i'm looking for a move lower. >> the concern about the citi comments was that equity would be a bigger component of compensation because it is a bank holding company and it's
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going to be confined by those regulations. so if equity is a bigger component that would be dilutive to the stock and the only way to offset that theoretically would be to buy back those shares. which goldman sachs could theoretically do, i would imagine, with all the cash -- >> i think it was just a knee-jerk reaction. i don't think anyone going forward is going to sell goldman off the fact they're going to be paid higher percentages in stock for their bonuses. sxwli think the trade sets up nicely. wednesday 188's the high. today could not get above 183. so right then and there you have two reference points if you want to step out of it, if you want to get short goldman sachs. but to me it all boils down to october 14th. october 14th they are going to report earnings, and will you see thick? will you see that component? the revenue, will it be there again? remember, last quarter the street was looking for about 3.65 in earnings. it came in north of five bucks. so you have to keep that in mind. if you are going to play goldman sachs from the short side, it's not something that i'd want to do. maybe the best trade in goldman is to do nothing right now and await those earnings. >> what do you think the best
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trade in goldman is right now? >> i have no position. that's what i think the best position is. but if i had to be one or the other i would be long because i do think the market will turn higher by the end of the year. >> and goldman will be the -- >> i think goldman will participate. >> speaking of financials, this is our chart of the day. let's bring up this because certainly with the turn in goldman sachs this certainly raises questions about the fate of the s&p 500 financial sector. this chart is courtesy of the spoke. the folks will drew some fancy lines using maybe a crayon perhaps. but anyway, what they're saying is right now the financial sector looks like it could break its 50-day moving average. if it does that that would be a level of 190, from current levels right now sitting out about 197 or so it could be a 3 1/2% decline from where we are now. that's not completely off the table, 3 1/2% move. they say if it does breach the 50-day it could be straight down from here. >> you wonder, the yield curve starts to flatten out today a little bit. i'm not going to make a big deal of it but it's something you
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have to watch. without question. that's been the catalyst for the banks to go higher the yield curve to be steep. now if it flattens out it makes wonder is this the first sign. you have to keep your eye on it. another bank flush not a huge deal, but you know, the 95th this year. things to me are not great on the margins. and durable goods today, again, you can't discount bad news. it is out there. >> it's definitely out there, but i think we all got a bit anesthetized toward the bad news. i don't disagree for a moment with guy. i think near term, though, we move higher and i think we move probably to 1,200. >> let's separate out because we got all that data this morning, the durables, new home sales, consumer sentiment, all of this was out there in the morning. we had a market that didn't do all that much on the back of any of those reports. and it was only midday when we saw that rollover. what was happening on the floor, steve? what was your sense of institutional investors and how they were feeling about the market at that moment? >> on a friday everybody wants to dump, no one wants to be long the market. people have been looking for october to be a horrific month for the market, and they're
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sitting on the sidelines. that's what i'm saying. >> let me go back to the banks. i don't think it's a yield curve issue. the issue in the sbankz going to be non-performers. if they come down a lot the banks are going to go higher. we've seen a flight to credit, all kinds of risky assets find huge bids so, i have to think that non-performer number is going to be pretty good for a lot of these banks. >> with so which banks -- >> bank of america. that's my favorite. >> which you own the common and the preferreds on. >> look at you. >> i remember these things. i've been sitting next to you for quite some time now, k-fine. the nasdaq, the worst performing index today, as shares were down. the stock down about 17%. certainly that was a story that we were analyzing here on the desk yesterday, and it didn't get much better from the outset. >> an absolutely horrific performance for rimm today. it opened up 71.42, which was lower than what we saw in the after-hours. and there was zero rebound, zero recovery throughout the day. it slid all the way down below 70 bucks. i think at one point it got as low as 68.42, somewhere around there. right now at rimm this report is
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a game changer for rimm. goldman sachs lowered the price target, downgraded rimm. going forward i don't know if it's one of the names you can continue to own as a hedge fund vip list. >> we talked about it yesterday. it will overshoot. it did it in june, it will do it again, it will overshoot probably next week. especially if the tape is weak. i'll say again don't jump into rimm thinking it's a value play because it's not and don't think you're buying the bottom because you won't, and those double tops loom in rimm. i think 65 is your first level. joe mentioned it trade down to 68 1/2 today. but i do think we'll see 65. and then go from there. we'll have an analyst on later to talk about it, but i think rimm is a crowded trade. people are going to have to pile out. wait for it to happen. >> i think we're going to bring in that analyst right now. you guys are down on rimm right now. this man, he's standing strong on the street out there.
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we had a number of downgrades today, raymond james, goldman sachs all cutting the stock on the back of the earnings downgrade. our next guest went out on a limb reiterating his outlook on the name. tavis mccoy. you're out there alone on the street right now. >> it sure feels that way. >> why are you still bullish on this name? they disappointed on so many levels when you look at new subscribers and you look at average selling prices, revenue guidance. why are we molding hope for this stock at this point? >> it's a function of i don't believe anything has really changed here. the afp guidance was a element bit weak, but it was largely because a couple of their high-end products that they expected to launch this quarter are going to launch later in the quarter. and they'll have the asps increase next quarter as those products launch. so if the bear story here is that this is going to be asp decline forever, i think that's going to be disproven in rather short order in two or three months. so, you know, they're still a company growing 20% or 30% a year. the valuation is reasonable. i agree with what everybody said before about the momentum in the
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stock, and i would doubt if we've seen the lows in the next week or two but i think we will see a low and a pretty good trading opportunity in the next month. >> tavis, the asp, i'm glad you spoke about that early. does this feel like a nokia story to you, though? isn't this how the nokia decline started as well, with the asps declining? >> yeah, but it's a different strategy. the reason for the asp decline is they just aren't shipping any high-end product this quarter. and they will start shipping that high-end product next quarter. this is not a strategic shift where all of a sudden they want to start selling $50 phones into india. this is still a smartphone company. and you'll have modest asp declines every year just like you've had the last eight years at rimm. but the significant asp decline we saw this quarter was really a unique circumstance in terms of what they happen to be shipping this quarter, and a lot of that reverses in the february quarter. >> hey, tavis, it's joe. real quick on the price itself, this is a momentum stock, as you know. is there anything you that need to see? if you don't get a quick
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snapback higher, are you going o'come in and maybe reassess, reevaluate your price targets on it? >> i don't think so. i think what would change my mind is the success of the two new high-end products that they're launching later this quarter in the holiday season. and that's a second version of the storm and an upgrade to the bold. if sales of those are weak, then you've got to reassess. but right now at least in terms of the reviews i've read on them and everything that i can tell from the specs, they look like very strong candidates to be definite-selling phones. >> tavis --
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welcome back to "fast money." it is time now for some chartology. let's go to the chart center back at englewood cliffs. cnbc headquarters. take a look at what the sell-off means for the market. greg troccoli of opalesque is there. in front of that magical chart. greg, what do you see? >> well, based on -- you guys mentioned it at the beginning of the show. we've been talking about it for the last couple of days. based on the q reversal on wednesday, which meant that the market made a new high, the index, december s&p index made a new high, and then it closed below tuesday's low. based on that, i put out an official sell signal to my subscribers to sell into the market on thursday morning on the opening. i went short at around 10:59. that was around the opening bell. i had a stop in above that high, which was just above 1,075 on wednesday. based on today's price action, i'm actually lowering it down to around 1,062. so i have really defined risk here, only about three points. and let's -- again, we have a solid up trend. we have a 21-day moving average line. that still remains absolutely positively sloped. but just based on that key reversal, i'll take a short
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position here, and i'm only taking three points of risk. >> more broadly speaking, greg, a lot of analysts out there are making a lot about being 20% above the 200-day moving average and what this pullback means. what's your interpretation? i've heard lots of different things saying if we're above the moving average by that much then it's a short-term correction. what's your take? >> i would agree. you certainly run that risk, melissa. and we talked about that a week ago. and again, you know, let's face it, october is not very kind to the equity markets. i mean, and history could repeat itself. but again, even a 20% correction i think is healthy. i think we got a little bit ahead of ourselves. >> let's move on to goldman sachs, greg. we saw a major reversal today, below 180. what do you see for that stock? >> well, melissa, goldman started the rally and really led the market. it was trading 53 in november. it never looked back, never made a new low when the market did back in march. it really has led the market. it went from 53 up to 185. the moving average line is down
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around 165. think, again, the broad market has to correct because i think goldman is acting in unison with the broad market. if the broad market continues to correct over the next week, couple of weeks, goldman will come down to 165 at minimum. so for me i can't recommend buying goldman up in this area since i'm already short the broad market. i'm looking for goldman to pull back. >> greg, it's grasso. i know that in october it's usually doom and gloom. my question is if we go out to november and december where do you see this market trading at? >> i heard you say at the beginning of the program, you could still look for 1,200 -- >> i can look for 1,121 fibonacci only because you have terranova, adami and grasso. so i've got to throw in another vowel there. >> well, 1,121 is that 50% retracement. i think we came so close to it now that if we start to fail over the next few weeks and you dip down 20% the market could get a little skittish trying to buy into the end of the year. i wouldn't be so confident on that. >> all right, greg, always nice to see you. have a great weekend. >> bye, guys. >> stay tuned. lots more "fast money" after this quick break.
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is welcome back. let's get to the stocks that were making extreme news this week. time for the weekly edition of "pops and drops." we kick it off with a pop. 10% was the move on the week. karen. >> it is a big move.
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but you know what, this is just -- it's just totally based on -- i don't know what. maybe short interest. nothing fundamental here. i would stay away from the name altogether. >> got a drop here for freeport-mcmoran on the week it was down 4%. joe. >> copper inventories are clearly building. freeport-mcmoran's a stock, technically it has to break below 66, but a lot of people are using freeport-mcmoran to get exposure to gold. i wouldn't necessarily sell this sort here. >> we've got a pop here for general mills. gis is up 5% this week. steve. >> my wife has a gluten allergy. i don't see any big makers of cereals that have any exposure to this. general mills does. i'd be a buyer. i think going into the next couple years you're going to see it be more of a presence. >> drop for dell on the week down 8%. guy. >> integrate perot systems, that's going to take a while. i think dell trades down to 14.25. you can buy it there. >> weave got a drop here for moody's.
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>> not a good week for moody and is one has to wonder what is left of their franchise if they don't have any credibility, people don't think they need the rating what do you get when you buy moody's. i wouldn't buy it. >> pop for natural gas, up 5% on this week, joe. >> absolutely. natural gas technically great rebound. as of 2:30 on this coming monday becomes a $5 commodity versus a $4 commodity. >> united health was down 11% on the week. steve? >> can anyone tell me that we're not going to reform health care in any way, shape, or form? no. so i'd stay away from the space. >> drop for a & f, abercrombie & fitch down 8% this week. >> the cute girl on your left told to you short that one, and it's going to go lower than this. you know it's just starting to go down. this one trades for 28 1/2 i think. >> the cute one on the left. >> cute girl, which is a little bit not respectful. >> i've been called a lot worse. i'll take it. >> we've got a pop here for guinness. you know, the beer. >> ah. >> 250 years ago this dark irish brew was first brewed and
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drinkers worldwide are lifting their mugs in celebration. last night in ireland they celebrated the 250th. the singer tom jones and ronan keating. celebrations are being held throughout europe, asia, and africa as well. >> love tom jones. >> who's tom -- >> oh, yeah, love him. >> yo don't you belt out your -- >> oh, "it's not unusual." "delilah." >> sing a little. >> there's the reason. >> click on, baby. let's head to our prop desk right noup in fact the biggest week for ipos in 18 months and everything from a battery maker to online vitamin retailers hitting the tape. what could this renewed surge in offerings mean for bank names? and are any of these rookies worth buying? certainly the one that really grabs attention this week was a-1 the battery maker. >> i know. great space. you know, all the rice buzz words. but in terms of the valuation, it's obscene. and we haven't seen valuations like these since the start of the internet era. so this kind of name, could it go higher?
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absolutely. but i couldn't touch it here. >> any other names in terms of the ipo -- >> it's nice the calendar's back. that's a great sign. great sign for the bank. it's the start of something, i believe. i think the calendar's looking a lot better going forward. to me, though, i keep going back to two names, lazard and green hill. green hill big short interest i still think it trades higher from here. >> that chart you are seeing up there, which you saw up there, showing the number of deals and the value of deals so far this year. this is as of 9-24. u.s. versus asia. asia actually, timmy's not here, but timmy, asian ipo $8.2 billion in offerings this year. u.s. 3.6. they're also getting profits from the secondary offerings as well. steve grasso, which names do you like based on that? the trade off the trade. >> i will tell you in the reit space there's a lot of these hybrid reits. i know karen has been in s.l. green. i don't know what your last position there is. >> flat. >> select medical holdings, that cam out today, which is a weird reit, but i think what they're
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doing is raising money in an environment that it's a lot easier to raise money in. i would expose myself there. >> i would regret saying that. unbelievable. i like what guy said. i think this is phenomenal for the credit markets, phenomenal for the equities markets, and also, let's not lose the revenue contribution that names like morgan stanley, goldman sachs, and jpmorgan are going to get participating in these deals. that space is consolidated. these are the three leading players right now. >> our time is winding down so, it is time now for the "final trade." governator, kick it off for us. >> ge. i think with this administration they're poised to make a lot of money on green jobs, on alternative energy. i'm going to say ge going forward. people got too focused on ge capital. >> guy. >> i think rimm will print 65. i think you own it there. >> karen. >> target. i'd be long.
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welcome to "options action." the gold standard, shares of goldman rolling over today, but stacy's got a strategy that could pay you to lock in gains in goldman sachs. why a weakness in rimm cowl take a bite out of america's favorite tech stock. but we've got a strategy that could protect your profits while preserving your gains. and as crude as they want to be, dan and mike correctly called the fall in financials. now they duke it out over oil. options actions starts now. we're here at the desk at the home of the world's third largest market site and in the
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windy city of chicago and brotherly love. the biggest point drop for stocks punctuated by bearish stock trades by a number of sectors. is smart money on the hunt for a red october? perhaps all that put buying has something to do with history. over the last 200 volatility spiked to more than 3000. rimm spooking some investors. are we seeing the outliars out there? >> we have to admit the circumstances going over there were exortdaire by any measure, but certainly anything other than rimm's earnings were negative. durable goods, housing, all these things were looking negative. so it's not that surprising to see


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